1.1 BRIEF HISTORY OF THE NIGERIAN EXPERIENCE AS A NATION STATE
To highlight some significant event and
developments in response to a review of Nigeria experience as a nation
state, it is intellectual to present a brief survey of the part to
understand the distinct phases through which the nation passed to arrive
at its present political state and economic condition vis-à-vis revenue
allocation. Some of these historical periods have enjoyed such a degree
of political stability that in reference to revenue allocation and
political stability, not only were great or studies made in the
promotion of social and economic development, the overall smoothness in
the functioning of the governmental system at both the regional and
federal levels over shadowed the negative consequences of the power
struggles and by the late 1950’s a myth of Nigeria as a “stable
democracy” enjoyed considerable international credibility.
The introduction of modern methods of
governance on a gradual pace in what could be described as a semi-
federal and quasi-democratic structure of 1946 Nigeria, like a newborn
baby of the British colonial administration passed through various
developmental phases of political growth. By 1957, the political
structure has developed into a well-structured democratic federal
political process upon the background and modern political process was
set Nigeria; in 1979, the constitution of the federal republic of
Nigeria provided for a democratic federal structure in the political
In this study, it is observed that the
introduction of system of revenue allocation in the Nigeria political
economy dates bank to the political development of 1946. It is note
worthy to state that the revenue allocation system in the political
process had indeed been accompanied by constitutional changes over the
decades. These suggest that the constitution provides the essential
political environment in a nation state.
It is significant that while the
constitution emphasis national unity with its concomitant principles of
deviation, population and equity of state in revenue allocation, to some
observer such constructional provision were not borne out of a true
desire for national unity and integration.
The revenue allocation issue in the
political economy of Nigeria is a volatile as any other national
question such a population. This means that how national revenue is
shared among the different component political units of the federal
structure is irretrievably tied to the national question. Hence no
broadly acceptable national revenue allocation formula has been had
since 1947 and which has not generated controversy but had to be made
acceptable “in the interest of national unity”.
Since 1947, about thirteen (13) formulas
have been devised for the sharing of national revenue. Everybody has
formed none satisfactory and such each one has generated more
controversy than the last one.
The politicians through their activities
in the revenue allocation agitation and ensuring power struggle aroused
the suspicion of the source but visibly political military to
hostility in a military fashion and cash in one invitation to seize
power in the country public opinion on national consciousness believed
that the national interest has debased by the politicization of the
revenue system sharing. Its outcome becomes the breakdown of the common
national spirit action and consciousness.
Thus, the Nigeria economic development through nationalism was scarified on the alter of ethnic and states power politics.
1.2 THE VARIOUS SOURCES OF REVENUE IN THE NIGERIA STATE
Revenue generation efforts by government
have been from various sources. However, there could be classified into
2 main sources of revenue in Nigeria. There are the oil and non-oil
sources. Over the year, prior to 1973, the revenue from non-oil source
contributed to sixty percent of the federally collected revenues but
from 1973 to now the contribution from the non-oil sources have reduced
drastically. This invariably makes may for the oil sources to generate a
major share of the government revenue.
Foreign exchange earnings from export of
agricultural commodities such as cocoa, palm produce, rubber, groundnut
e.t.c. as major sources of foreign exchange earning and government
The federal constitution of Nigeria,
provides that all revenue collected under federal laws be known as
federally collected revenue and paid into federation account and
distributed to the federal, state and local government according to the
existing revenue allocation formula.
The revenue of government comprises of the following sources;
SOURCE: OIL REVENUE
- Petroleum profit tax
- Rent, royalties and NNPC
- National Economic New Structure Fund (NENSF)
- Company income tax
- Import duties
- Export duties
- Excise duties
- Capital gain tax
- Personal income tax
- License fee on television and wireless radio
- Stamp duties
- Sales or purchase tax (now value added tax)
- Football pools and other betting taxes
- Motor vehicle tax and driver license fees
- Entertainment tax
- Land registration and survey
- Property tax
- Market and trading license fees
- Motor park dues
- Land ground rent fees
1.3 THE NEED/BASIS FOR REVENUE ALLOCATION
In the light of presentation and
deliberation between the various levels of government, federal state and
local government and the need to ensure that each tier of government in
the federation has adequate revenue to enable it discharge its function
as laid down in the constitution. Therefore in determining what
proportion of the national revenue often referred to as federation
account that should go to my tier of government for the discharge of the
constructional functions, it will be ideal to first demarcate these
functions, as may be laid down in me constitution for each tier of
government, identify also the appropriate level of service to be
performed by each tier determine what should be the cost to perform
efficiently at that level and therefore add up the financial
requirements for each tier should then yield the relative weight in
financial terms of the function laid down by the constitution. With
these fact on hand, the three tiers of government in proportion to these
relative weights. It follows that for effective distribution of
national revenue; basic broad guidelines or the distribution of the
revenue among the three tiers of government becomes necessary and must
be strictly adhered to.
1.4 STATEMENT OF THE RESEARCHERS
There are problems with devising a
scheme of revenue allocation that is nationally understood and widely
accepted as equitable, over the years various formula as many as
thirteen have been tested and each has received some criticism and
resentment from some quarters of the nation state.
1.5 PURPOSE OF STUDY
The work aims at examining the revenue
allocation with a view to fully appreciating its impact on political
stability of the nation.
This work also reviews briefly some past
revenue allocation principles in order to place this work on the proper
1.6 STATEMENT OF HYPOTHESIS
Base on the problem and objective of this study the following hypothesis is proposed.
- Does revenue allocation issue contribute to political instability in Nigeria?
- Is revenue allocation problem the only issue that led to political instability in Nigeria?
- Is revenue allocation problem caused by lack of awareness or
- Understanding on part of Nigeria as to the actual revenue allocation formula?
- Are the criteria of revenue allocation the most equitable in Nigeria?
- Does the revenue allocation formula adversely affect the economy of the country?
- Are the plans to increase the revenue allocation sources of the
economy a means to increase available for the achievement of greater
1.7 SIGNIFICANCE OF THE STUDY
Having clearly identified the problem of
sharing the revenue accruing to the nation state of Nigeria. The search
of solution should start with making tireless efforts to educate the
people to understand the principle and to be reasonably flexible in
formulating the underlying formula for the distribution of revenue among
the differed level of government, the three tiers of government in an
acceptable manner in order to promote national unity through common
1.8 SCOPES AND LIMITATION OF STUDY
This study was not carried out without
some constraint. Many factors have handicapped and hindered the research
from meeting up with the research among the factors are;
COST: For total
accomplishment of the objective of the study to be achieved, the demand
is much more costly than the researcher could afford.
TIME: While carrying out the study of
this magnitude, it requires more time than that which was given to the
researcher and this was serious limitation on the researcher work.
ATTITUDE OF RESPONDENT:
The attitude shown towards scholars and researchers is discouraging. In
the course of gathering data for this study, some responds showed great
apathy in releasing information thereby reducing the possibility of
ACADEMIC PROGRAMME AT THE TIME OF STUDY
A student researcher aimed this study
out; following this at the time of this study, there was a lot of
disruption of academic work and as a result, the motivating factors and
joy that follow researching wasn’t there.
1.9 DEFINITION OF TERMS
Certain usage are explained us they apply to the revenue allocation and political stability discussed in the research work.
The term “political process” refers to
what general takes place between leader and those they lead. It deals
with aspect of relationship between human being, particularly, which
have some direct bearing of authority within a community. It involves
the use of discussion, criticism, negotiation confrontation, alliance,
competition, choice and co-operation as various ways of seeking
individual and community goals.
By revenue it refers to the return field on source of any land property or the other important sources of income.
Principles of allocation refer to the
rules to be applied on general law to be applied in the allocation of
revenue. “Criteria” means the stand and by which to Judge the allocation
for the criteria to be applied, there need to know the purpose of the
allocation, which shift financial resources from one fiscal unit to the
Political system can be described as the
interaction to be formed all independent societies, which performs the
functions of interrogation, and adoption – both internally and vis-à-vis
other societies by means of the employments of, or threat of employment
more or less legitimate physical compulsions.